Budget talks bogged down over 6% tax State's finances, other legislation are left in peril

ANNAPOLIS -- House and Senate tax conferees, who had angrily broken off talks yesterday, resumed negotiations last night, but failed to resolve their major differences before they suspended work at 12:30 a.m.

They planned to reconvene at 9 o'clock this morning, but with adjournment just 15 hours away, time was fast running out.

"We have sort of a 'drop dead' time tomorrow," Sen. Laurence Levitan, a Montgomery Democrat, said just before midnight. "If we don't have a decision by noon, there's no way in the world. . . ."

Blaming each other for inflexibility, the two sides could not agree on how long to extend a proposed 6 percent income tax bracket for Maryland's wealthiest citizens.

That disagreement could force the legislature to pass a last-minute Doomsday budget balanced by $260 million in cuts to local aid, school funding and health care for the poor -- or pass no budget at all.

In a rare Sunday session, legislative leaders had hoped to come up with enough taxes to pass the $12.5 billion 1993 budget without those cuts. New compromise proposals were put on the table late last night, but again no final agreements were reached.

Unless the tax dispute is resolved, the General Assembly could be asked to vote for a $12.5 billion budget for Fiscal Year 1993 that must be balanced by nearly $260 million in additional spending cuts.

Those reductions -- listed in legislative documents under the title"Armageddon" -- would stick Baltimore and the 23 counties with another $95 million in cuts in state aid, on top of the $250 million in local aid already chopped away.

The cuts would mean closure of most parks and forests and of the mental hospital in Crownsville. They would also mean deep cuts in aid for public schools, community colleges, rental housing, Medicaid and a long list of other programs.

If legislators fail to pass a budget by midnight tonight, the scheduled end of the 90-day session, the session will automatically be extended until they do so -- something that has not happened in Maryland for at least 35 years. That alone will cost taxpayers $15,000 to $20,000 a day.

The Maryland Constitution prohibits consideration of anything but the budget during an extended session, which means the state's $350 million capital construction program and any other legislation still pending when time runs out would die.

Several important bills still await final votes, including Gov. William Donald Schaefer's bills on suburban sprawl and providing additional court remedies to battered women.

"I'm worried, uneasy and nervous" about the bills getting lost in the budget frenzy, said David S. Iannucci, the governor's chief lobbyist.

Only enactment of new taxes can keep the additional cuts from going into effect. But grim legislative leaders conceded yesterday that even if they can strike a deal in a conference committee, they may not have the votes for taxes on the floor tonight. This is especially true in the Senate, where one anti-tax senator could single-handedly filibuster it to death.

It was shaping up as a fitting end to a legislative session in which a suddenly vocal Republican minority forced many rank-and-file Democrats -- scared of an anti-tax, anti-incumbent electorate -- to push for a no-new-taxes budget.

If no tax bill is enacted, the political losers may turn out to be those who got caught in the switches: lawmakers who put their careers on the line by voting for taxes but who still will be blamed for passing a budget containing so many deep cuts in programs and services.

If the tax bill fails, with it will go a nickel-a-gallon increase in the gas tax proposed to revive the state's moribund road-building program and a 20-cents-a-pack increase in cigarette taxes.

Just as important, local governments would not get an increase in taxing authority that local officials had counted on to offset huge cutbacks in state aid.

Also at stake were several special local aid programs that would be financed by the proposed tax increase, including a $30 million "disparity" grant to Baltimore and five poor rural counties, $17 million for educating disabled students, mass transit subsidies for Montgomery and Prince George's counties, a grant to fight violent crime in Baltimore and Prince George's, a grant for magnet schools in Prince George's and a separate grant for schools around the state that fail to meet minimum statewide standards.

"If the House members are going to walk away from that, so be it," said a disgusted Senator Levitan, who is chairman of the Budget and Taxation Committee.

From the outset, the Senate tax conferees opposed the House's plan for a new 6 percent tax bracket for Marylanders with taxable incomes of $100,000 a year or more. Such a plan would have cost a taxpayer with $120,000 in taxable income a total of $200 a year.

To break the deadlock, the senators suggested extending the tax increase for only two years, fearful a permanent change might bring the state an embarrassment of riches.